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Nokia vs. Motorola: Which Stock to Bet on Post Q1 Earnings?
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With first-quarter earnings drawing to a close, industry peers are doing various analysis and comparisons to gauge the underlying metrics and relative performance. Let us perform a similar comparative analysis between two stocks in the Zacks Wireless Equipment industry — Nokia Corporation (NOK - Free Report) and Motorola Solutions, Inc. (MSI - Free Report) — to pick the better investment option.
Earnings Scoresheet
Nokia’s first-quarter 2018 earnings (non-IFRS) per share of €0.02 or 2 cents missed the Zacks Consensus Estimate of 3 cents. In the year-ago period, the company reported non-IFRS earnings of €0.03 per share. Net sales decreased 9% year over year to €4,929 million ($6,057.3 million) and missed the Zacks Consensus Estimate of $6,271 million. The top line primarily declined due to currency woes and lower net sales in North America. Quarterly adjusted gross margin was 39.4% compared with 40.8% a year ago. Adjusted operating margin decreased 150 basis points to 4.8% on a year-over-year basis. The margins were impacted by adverse currency fluctuations and soft market conditions in North America.
Motorola reported strong first-quarter results on the back of healthy growth across all geographic regions. GAAP earnings for the reported quarter were $117 million or 69 cents per share compared with $77 million or 45 cents per share in the year-earlier quarter. The year-over-year improvement was primarily attributable to top-line growth. Excluding non-recurring items, non-GAAP earnings for the reported quarter were $1.10 per share compared with 71 cents in the year-ago quarter. The bottom line exceeded the Zacks Consensus Estimate of 86 cents. Net sales in the reported quarter came in at $1,468 million compared with $1,281 million in the year-ago quarter, driven by organic growth of 10% and healthy performance across all regions. Quarterly sales exceeded the Zacks Consensus Estimate of $1,371 million.
Based on first-quarter earnings, Motorola has a clear edge over Nokia due to a better earnings and sales surprise percentage.
Price Performance
In the past year, Motorola clearly outperformed Nokia with an average return of 29.2% against a loss of 0.5% for the latter while the industry gained 5.1%.
Guidance
Nokia reiterated its earlier guidance for full-year 2018 with weakness expected in its Networks business in the first half followed by gradual improvement in market conditions and accelerated 5G rollout by the year end.
Motorola is poised to gain from robust organic growth, disciplined capital deployment and a favorable global macroeconomic environment. With solid quarterly results and continued strength in order trajectory, management has raised the earlier guidance for 2018. Full-year adjusted earnings are currently anticipated to lie within the $6.70-$6.85 per share range, up from $6.50-$6.65 expected earlier on revenue growth of 14%, up from prior expectations of 10-11% growth.
Based on the current scenario, Motorola seems to have trumped Nokia on most fronts and stands out as a better investment option. A couple of better-ranked stocks in the industry are Comtech Telecommunications Corp. (CMTL - Free Report) , carrying a Zacks Rank #2 and PCTEL, Inc. , sporting a Zacks Rank #1.
Comtech Telecommunications has a long-term earnings growth expectation of 5%. It surpassed estimates in each of the trailing four quarters with an average positive earnings surprise of 111.4%.
PCTEL topped estimates twice in the trailing four quarters with an average positive earnings surprise of 17.9%.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
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Nokia vs. Motorola: Which Stock to Bet on Post Q1 Earnings?
With first-quarter earnings drawing to a close, industry peers are doing various analysis and comparisons to gauge the underlying metrics and relative performance. Let us perform a similar comparative analysis between two stocks in the Zacks Wireless Equipment industry — Nokia Corporation (NOK - Free Report) and Motorola Solutions, Inc. (MSI - Free Report) — to pick the better investment option.
Earnings Scoresheet
Nokia’s first-quarter 2018 earnings (non-IFRS) per share of €0.02 or 2 cents missed the Zacks Consensus Estimate of 3 cents. In the year-ago period, the company reported non-IFRS earnings of €0.03 per share. Net sales decreased 9% year over year to €4,929 million ($6,057.3 million) and missed the Zacks Consensus Estimate of $6,271 million. The top line primarily declined due to currency woes and lower net sales in North America. Quarterly adjusted gross margin was 39.4% compared with 40.8% a year ago. Adjusted operating margin decreased 150 basis points to 4.8% on a year-over-year basis. The margins were impacted by adverse currency fluctuations and soft market conditions in North America.
Motorola reported strong first-quarter results on the back of healthy growth across all geographic regions. GAAP earnings for the reported quarter were $117 million or 69 cents per share compared with $77 million or 45 cents per share in the year-earlier quarter. The year-over-year improvement was primarily attributable to top-line growth. Excluding non-recurring items, non-GAAP earnings for the reported quarter were $1.10 per share compared with 71 cents in the year-ago quarter. The bottom line exceeded the Zacks Consensus Estimate of 86 cents. Net sales in the reported quarter came in at $1,468 million compared with $1,281 million in the year-ago quarter, driven by organic growth of 10% and healthy performance across all regions. Quarterly sales exceeded the Zacks Consensus Estimate of $1,371 million.
Based on first-quarter earnings, Motorola has a clear edge over Nokia due to a better earnings and sales surprise percentage.
Price Performance
In the past year, Motorola clearly outperformed Nokia with an average return of 29.2% against a loss of 0.5% for the latter while the industry gained 5.1%.
Guidance
Nokia reiterated its earlier guidance for full-year 2018 with weakness expected in its Networks business in the first half followed by gradual improvement in market conditions and accelerated 5G rollout by the year end.
Motorola is poised to gain from robust organic growth, disciplined capital deployment and a favorable global macroeconomic environment. With solid quarterly results and continued strength in order trajectory, management has raised the earlier guidance for 2018. Full-year adjusted earnings are currently anticipated to lie within the $6.70-$6.85 per share range, up from $6.50-$6.65 expected earlier on revenue growth of 14%, up from prior expectations of 10-11% growth.
Zacks Rank
Both Motorola and Nokia currently carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
To Sum Up
Based on the current scenario, Motorola seems to have trumped Nokia on most fronts and stands out as a better investment option. A couple of better-ranked stocks in the industry are Comtech Telecommunications Corp. (CMTL - Free Report) , carrying a Zacks Rank #2 and PCTEL, Inc. , sporting a Zacks Rank #1.
Comtech Telecommunications has a long-term earnings growth expectation of 5%. It surpassed estimates in each of the trailing four quarters with an average positive earnings surprise of 111.4%.
PCTEL topped estimates twice in the trailing four quarters with an average positive earnings surprise of 17.9%.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>